This Week in Illinois

ENVIRONMENT

Marron introduces Coal Ash Task Force resolution. Representative Mike Marron (R-Fithian) introduced legislation on Friday which would create a Coal Ash Task Force to bring together legislators, coal company representatives, environmental experts and the public to study the effects of coal ash on the Vermilion River and the state as a whole.

“In 2011, Dynegy closed the Vermilion Power Station, a former coal-fired power plant which sits on a bluff above the Middle Fork of the Vermilion River along 17 miles of wild and scenic river,” Marron said. “There are 3.3 million cubic yards of coal ash produced over the plant’s 55-year operating life currently stored in three coal ash pits on the site, and we must come together in order to move forward in a safe and environmentally appropriate manner.”

Coal ash contaminants can include arsenic, barium, boron, chromium, iron, lead, manganese, molybdenum, nickel and sulfate, which are known to cause birth defects, cancer and neurological damage in humans and can harm and kill wildlife, especially fish. Marron says the membership of the task force would include two Senators and two Representatives selected by the legislative caucus Leaders, an Illinois Environmental Protection Agency representative, a representative of the Prairie Research Institute at the U of I, a representative from environmental groups, and a representative from the business community.

FLOODING

Severe flooding in many parts of Illinois, including Freeport and Rockford areas. In northern Illinois, the Illinois Emergency Management Agency is deploying emergency aid to homeowners and small businesses near the Pecatonica and Rock Rivers and their tributaries. River gauges are showing record or near-record water levels in the annual spring runoff, and hundreds of homes have been evacuated. The Pecatonica River which drains hills in the “Galena Region” of southwest Wisconsin, is posting water gauge levels not seen since 1933. 

In addition to direct property damage, high water levels could also have an indirect effect on Illinois agricultural production and productivity. Crop sowing cannot be done until the fields dry out, and delays in planting seeds could force farmers to purchase more expensive seed with lower bushels-per-acre yield rates. Meanwhile competing farmers in states such as Arkansas, Louisiana, and Mississippi are already planting their crops for 2019. Other states, such as Nebraska, Iowa, and Missouri, are also seeing damage from the spring flooding event.

March 18-22 is Flood Safety Awareness Week in Illinois.

GAMBLING

Major sports wagering proposals introduced. Illinoisans could see new solicitations to bet money soon, this time on sporting events such as football and basketball games. The proposed Sports Wagering Act, introduced in the Illinois House as HB 3308, would govern the legalized and regulated bookmaking of bets on sports games and contests. Amendments to HB 3308, introduced in the Illinois House on Thursday, March 21, describe how sports betting would be legalized, regulated and taxed in Illinois. These amendments could be discussed in the Illinois House and its Committee on Revenue & Finance next week. Opponents are concerned about how sports betting could potentially spur compulsive gambling, and could entangle young adults who themselves play sports into the betting business. Other states, led by Nevada and New Jersey, have already legalized sports betting. 

STATE GOVERNMENT

Commission on Government Forecasting and Accountability (CGFA) issues report on state employee group insurance. The report focuses on the growing cost to taxpayers of the health insurance policies purchased by the State on behalf of State employees and retirees. The State Group Health Insurance Program (SEGIP), like all facets of U.S. health care, is affected by growing American health care costs. These costs include not only new treatments and technologies, but also the growing tendency of health care providers to practice strategic cost-shifting. Conscious of their duty to provide care to all patients, including patients without means or whose care is covered by charity-care programs such as Medicaid, health care providers often move facets of the overall cost of health care around. The State of Illinois is one of the entities affected by these cost shifts.

CGFA staff estimates the cost of SEGIP to be $3.023 billion in FY19, the fiscal year that will end on June 30, 2019. With continued increases in U.S. health care costs, the cost of SEGIP is anticipated to increase to $3.130 billion in the approaching fiscal year, FY20. Continued efforts at the containment of costs upon State taxpayers from this expensive program have minimized some facets of this increase. SEGIP beneficiaries are being required to make higher copayments, and are being subjected to various care wait-times and other care features familiar to patients throughout the United States. The overall SEGIP increase from FY19 to FY20, in percentage terms, will be only 3.5%. However, because of the great size of this program, even this comparatively modest percentage increase will exact an additional cost of $107 million anticipated additional dollars upon the hard-pressed State budget. 

The CGFA report on SEGIP and its costs represents one facet of the General Assembly’s ongoing nonpartisan attempt to maintain lawmaker understanding of the overall budget pressures facing Illinois.

TAXES

House Republican lawmakers urge colleagues to stop ignoring tax realities. State Representatives Tom Demmer (R-Dixon) and Patrick Windhorst (R-Metropolis) spoke at a Capitol press conference on Wednesday to call for an end to the barrage of tax increases that earned Illinois the new title of “highest tax burden state in the nation.”

“As legislators, it is our duty and obligation to inject some realism into the debates that happen here,” Demmer said. “We can’t simply ignore that we have the highest taxpayer burden in the nation, and we can’t ignore the fact that people are leaving Illinois in record numbers. We can’t ignore that better opportunities and economic growth is occurring in states all around us. We need to get serious about making some changes to how Illinois does business, and provide meaningful tax relief to individuals. We need to provide better opportunities for families and make Illinois a place where jobs and investments grow.”

“One of the reasons I ran for office is because I’ve seen my friends, family members, neighbors, local businesses and my constituents leave Illinois for cheaper living and less regulations,” Windhorst added. “The reason people are leaving is because it is too expensive to live here and do business here. When it comes to state and local taxes, our citizens are maxed out.”

The statements from the Deputy Republican Leader from northwestern Illinois and the freshman member from southern Illinois came in reaction to a WalletHub study which found Illinois has the highest overall tax burden in the nation. Illinois’ median tax rate is 14.9%, while the national average is 10.76%. Illinois’ overall ranking in taxpayer friendliness is #49 in the nation when the cost of living adjustment is taken into consideration.

The governor’s proposed graduated income tax would only make matters worse, Demmer said. “What that does is open up the tax rates to continued interference by lawmakers. If approved, forever more, the General Assembly will no longer be bound by a flat tax mandate in the Constitution. The question isn’t ‘what is the initial rate schedule?’ The question is, ‘can Illinoisans count on politicians in Springfield to do the right thing and not overtax?’ The answer, without a doubt, is ‘no.’ With a graduated income tax, it will be too easy for lawmakers to come back year after year and take a little bit more from taxpayers until we end up with a significantly increased burden on average families.”

Illinois Manufacturers Association (IMA) calls for new moves to aid job creation and workforce development. The business group called for creating additional certainty in Illinois tax law by ending the General Assembly’s habit of switching the key Research and Development tax credit on and off. The IMA also pointed to a growing shortage of certified workers with the technical training to operate complex electronic machinery, and called for apprenticeships and community college programs to create incentives for industry-standardized job training suitable to a modern manufacturing workforce. 

The manufacturing association’s CEO Mark Denzler pointed out, however, that instead of taking steps to help Illinois high schools and community colleges move students into pathways that lead to valuable jobs with good benefits, the General Assembly is currently looking at increasing taxes on employers and workplaces. Many private-sector Illinoisans work in “pass-through” entities where the tax liability is borne on the individual level by the owners or partners who own the workplace. These businesses are already charged the full Illinois individual income tax plus a supplement of at least 1.5%. 

The General Assembly, spurred on by the governor, is currently considering making key changes to Illinois income tax law and constitutional status. Under these changes, the “pass-through” income tax rate could go up to at least 9.45%, and the full income tax rate charged to some corporations could go up to at least 10.45% – prior to additional tax increases that could be charged once a swarm of politicians start looking for additional revenue. 

There are other, better ways for Illinois to invest in its future. IMA’s Mark Denzler made his presentation on Tuesday, March 19.