IVCA Provides Updates for State and Federal Legislative Issues - 10.25.17

IVCA Provides Updates for State and Federal Legislative Issues

UPDATE provided by Stricklin & Associates on October 25, 2017:
This week the Illinois General Assembly is in Veto Session October 24, 25 and 26.  The second week of Veto Session is scheduled November 7, 8 and 9.
Veto Session is historically a time for the legislature to vote whether to override or sustain vetoes the governor has issued on legislation approved during the Spring Session.  Veto Session is also an opportunity for passage of measures which were stalled during the Spring Session or needed additional negotiation before they were ready for a vote.
IVCA members should be alert for any notification from Executive Director Maura O’Hara if action is being taken or even contemplated on the 20% “privilege tax” on capital gains earned by investment managers, SB 1719 and HB 3393.  Because the Veto Session requires legislation to reach a 3/5th threshold for approval, rather than a simple majority, it would appear an uphill climb for supporters of the tax to move either bill in the Veto Session.  Both versions of the tax bill are in the House Rules Committee, which generally means they are sidelined.  Nevertheless, we will be in the Capitol and will remain on high alert. 
We again encourage IVCA members to take time to reach out to their elected state officials and make clear their opposition to the “privilege tax” and to help legislators understand why it is not only bad public policy but would have a significant negative impact on not only our industry but on the tech/entrepreneur ecosystem which is driving any gains the Illinois economy is experiencing.
Governor Rauner on Monday (10/23) announced officially he would run for re-election in 2018.  The governor released a video to help kickoff his announcement which you may view here:
Displeased by his signature on bills related to abortion rights and immigration, Representative Jeanne Ives (R-Wheaton) has openly discussed assembling a campaign to contest the Republican primary in March 2018.  While upsets happen in politics just as they do sometimes in sports, Governor Rauner would have to be considered a prohibitive favorite to secure the Republican nomination and be the Republican candidate running for re-election in November of 2018.
At the same time, new polling shows Democrat J.B. Pritzker putting distance between himself and his closest primary challengers, with 39% of the Democratic primary vote compared with  Chris Kennedy 15% and Dan Biss 6%.
Media reports have the Chicago/Illinois package to attract Amazon’s Q2 to Chicago or its nearby suburbs at $2.25 Billion.
Governor Rauner this week raised the notion of seeking federal relief from the pension obligation with which Illinois and its state budget is saddled.

“There’s so many things that we can’t touch because we’re unreasonably hamstrung,” Rauner said. “And the federal government can say, ‘No, federal restructuring law supersedes the state restrictions, Congress is freeing up states to restructure their pensions as they need to, as they see fit.’”
The idea comes from conservative policy circles but hasn’t been written into legislation that’s been seriously considered in Washington. Critics like Democratic Illinois Senate President John Cullerton said the idea raises “serious constitutional concerns.”
Every serious conversation about the Illinois state budget must include the cost of making annual pension contributions and what can or should be done to curb the liability in the state’s pension funds more rapidly than current law which projects 90% funding in 2045. 
(Source:  Commission on Government Forecasting and Accountability
The General Assembly and Governor have changed the system for state employees hired after January 1, 2011 but the bigger picture has been more challenging due to the state constitution and rulings of the Illinois Supreme Court.
in 2013 the legislature passed and Governor Quinn signed legislation to make significant changes in pension benefits, however, in 2015, the Illinois Supreme Court invalidated the law saying it violated this clause of the state constitution:

    Membership in any pension or retirement system of the
State, any unit of local government or school district, or
any agency or instrumentality thereof, shall be an
enforceable contractual relationship, the benefits of which
shall not be diminished or impaired.
(Source: Illinois Constitution.)

The Illinois Supreme Court has also ruled against changes to City of Chicago pensions based on similar analysis:
(AP) — The Illinois Supreme Court dealt another devastating blow Thursday to the state's impatient attempts to control its ballooning public pension debt by striking down a state law that would have cut into an $8 billion hole in two of Chicago's employee pension accounts.
The General Assembly has also in recent years engaged with a pension reform model centered around the legal theory of “consideration”, which is embodied in SB 16 and has been championed by Senate President Cullerton, suggesting the “contract” between state employees and the government is something which could be negotiated.  The bill narrowly passed the Illinois Senate 31-21 on May 17 of 2017, but has not progressed further.